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5 Heavily-Shorted Stocks Set to Report

I would avoid PSMT or look for short-biased trades if after earnings it fails to trigger that breakout, and then drops back below some key near-term support levels at $73.58 to $73.40 a share with heavy volume. If we get that move, then PSMT will set up to re-test or possibly take out its next major support level at $70.09 a share.


My final earnings short-squeeze play is Ceres (CERE - Get Report), which is set to release numbers on Thursday after the market close. This is an agricultural biotechnology company selling seeds to produce renewable biomass feedstocks that can enable the large-scale replacement of petroleum and other fossil fuels. Wall Street analysts, on average, expect Ceres to report revenue of $1.33 million on a loss of 32 cents per share.

The current short interest as a percentage of the float for Ceres sits at 3.8%. That means that out of the 17.34 million shares in the tradable float, 376,000 shares are sold short by the bears. This isn't a huge short interest, but it's more than enough to spark a solid short-squeeze if Ceres can deliver the earnings news the bulls are looking for.

From a technical perspective, CERE is currently trending above both its 50-day moving average and well below its 200-day moving average, which is neutral trendwise. This stock has been uptrending for the last two months, with shares moving higher from a low of $3.43 to its recent high of $4.68 a share. During that uptrend, shares of CERE have been consistently making higher lows and higher highs, which is bullish technical price action. That move has now pushed CERE within range of triggering a major breakout trade post-earnings.

If you're in the bull camp on CERE, then I would wait until after its report and look for long-biased trades if this stock manages to break out above some near-term overhead resistance at $4.68 a share with high volume. Look for volume on that move that registers near or above its three-month average action of 48,256 shares. If that breakout hits, then CERE will set up to re-test or possibly take out its next major overhead resistance levels at $5.50 to $5.62 a share. Any move above $5.62 will then put $6.16 to $7 into focus for shares of CERE.
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CERE $0.24 -0.42%
PSMT $85.50 1.20%
SNX $79.14 1.30%
SVU $4.67 1.30%
XRTX $13.24 0.08%


Chart of I:DJI
DOW 17,740.63 +79.92 0.45%
S&P 500 2,057.14 +6.51 0.32%
NASDAQ 4,736.1550 +19.0610 0.40%

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